1999 (4) TMI 42

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....vered during the search of the business premises by the Revenue authorities. The repayment was made to the extent of Rs. 3 lakhs on July 4, 1979, and Rs. 2 lakhs on February 20, 1980. While the advance was entered in the assessee's cash book, the repayment was credited in the bank account maintained by the assessee for recording its transactions with its foreign principal, namely, Jugolinija Rijeka, Yugoslavia. But, the assessee pleaded that the advance of Rs. 5 lakhs was free of interest. But, the evidence of one of the partners is that interest was paid on several dates during the periods 1979 to 1980. The pronote also stipulates rate of interest. The Income-tax Officer cross-verified with the foreign principal and found that the advance ....

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....law in deleting the addition made on account of interest receipts stipulated in the pronote seized at the business premises of the assessee ? 2. Whether, the Tribunal's conclusion that there was no firm evidence to show that the assessee had been in receipt of interest of Rs. 67,790 from Mohd. Ismail and Company, is reasonable and sustainable in law on the basis of materials available on record ?" During the search conducted by the Department at the business premises of the assessee on May 20, 1980, it has been revealed that the assessee paid an advance of Rs. 5 lakhs to Mohd. Ismail and Company, on a pronote dated March 15, 1979, and obtained interest of Rs. 67,790 from that firm and the assessee did not disclose either the advance o....

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.... assessee-company. The assessee-company admits the advance of Rs. 5 lakhs and also about the repayment, but vehemently contends that no interest was received. That contention cannot stand for a moment because, even the pronote seized from the assessee-company's premises clearly indicates that the assessee had advanced Rs. 5 lakhs to Mohd. Ismail and Company for interest at the rate of 44 paise per thousand rupees per day. Even though the assessee's accounts do not reveal any receipt of interest with regard to this amount, the entries found in the books of Mohd. Ismail and Company had clearly disclosed the payment of interest to the assessee-company. Those entries which have been made in the normal course of business must be accepted as true....